You can try sistering in new studs as long as the base plate isn't damaged. If it were my house, however, I'd rip the entire rotten mess out and put in all new base plate, studs and drywall. Like my pappy used to tell me: "Son, go big or go home".
Good luck with your project! I agree with the other poster who directed you to the John Bridge Tile forum.....there's some amazing talent hanging out there and you'll get plenty of good advice.
Scott Vroom
I started with absolutely nothing. Now, thanks to years of hard work, careful planning, and perseverance, I find I still have most of it left.